Thailand: Enforcement Of Thailand's New Anti-Money Laundering Law Begins

Long a major crossroads for drug trafficking and the laundering of the resulting huge sums of tainted cash, Thailand is now finally set to begin enforcement of a comprehensive anti-money laundering act passed by the Thai Parliament in March 1999. The new law is aimed at combating not only the illicit drug trade, but also corruption, prostitution and other crimes.

Thai law enforcement officials initially proposed the enactment of a money laundering act some years ago to target the transfer of money and property derived from the rampant trade in illegal narcotics, as well as to comply with requirements for membership under the 1988 Convention Against Illegal Traffic in Narcotic Drugs and Psycho-toxic Substances. Additional criminal offenses were added during the legislative process, and the law as enacted covers the transfer or conversion of funds or property obtained from:

1. Narcotics trafficking;
2. Prostitution and other sexual offences;
3. Fraud against the public;
4. Fraud involving financial institutions;
5. Abuse of position by a government official;
6. Extortion;
7. Trade in contraband.

Under the new law, it is a crime to transfer, convert, or receive the transfer of funds or property arising from the above-specified criminal offences for the purpose of hiding or concealing the source of the funds. Violators are punishable by imprisonment of up to 10 years plus a fine of up to 200,000 Thai Baht (about US$4,600). Violators are defined as persons who commit or attempt to commit a money laundering offence, or aid another person in committing a money laundering offence.

Banking transactions are a primary activity subject to scrutiny under the anti-money laundering law, but other financial transactions are also covered. For example, an individual who secretly uses the money from a drug sale to purchase shares of publicly traded stocks on the Stock Exchange of Thailand could be prosecuted under the new law. Or, a corrupt official who used money obtained from a bribe to purchase land runs the risk of being exposed and having the land confiscated.

Perhaps the most effective tool in combating crime is the ability of enforcement officials to seize, without a warrant, money or property connected with the commission of one of the seven specified crimes, or a money laundering offence. The owner of seized property must convincingly demonstrate the property is not related to the commission of one of the enumerated crimes, or a money laundering offence, in order to recover the property.

A key provision of the new law requires banks and financial institutions to report all cash transactions over two million Thai Baht (about US$46,000). Property transactions involving cash in excess of five million Baht (about US$115,000) must also be reported. Also required to be reported are suspicious transactions that may relate to one of the specified targeted crimes, are more complex than normal, lack economic plausibility, or appear to have been undertaken to avoid compliance with the anti-money laundering law. The reporting institutions must require their customers to provide a detailed record of the transaction.

Local banks, other financial institutions, and government land offices have been busy training their staff on the new law's reporting requirements, in order to avoid penalties for non-compliance. Failure to comply with the reporting requirements is punishable by a fine of up to 300,000 Thai Baht (about US$7,000). Filing a false report is punishable by a fine of up to 500,000 Thai Baht (about US$11,500) and imprisonment for up to two years.

Provisions of the law, "The Money Laundering Prevention and Suppression Act B.E. 2542", called for it to take effect in August 1999. The Thai Bankers Association and others charged with the obligation of reporting the estimated 300,000 transactions per day falling under the new law's requirements successfully lobbied for delay in enforcement to allow for employee training and the addition of new staff and equipment needed for compliance.

Enforcement was also delayed because it took time for a new enforcement agency, the Money Laundering Prevention and Suppression Commission, to be set up, employees recruited, reporting systems established, and implementing ministerial regulations developed and issued. All of these measures were in place by the end of October 2000. The only remaining question is, who will be the first offender to have his or her ill-gotten gains seized under the new law?